MULLIKIN: Obama EPA set to derail fracking, kill 1.7 million jobs

Administration’s energy regulations stifling the economy

By Thomas Mullikin - -
Friday, November 2, 2012

In the final days before the election, we need to frame the energy debate in its appropriate context. The real issue isn’t how many pipelines have been built in the past four years or how much drilling has been done on federal lands, both of which got a fair amount of airtime during the second presidential debate. No, the issue is jobs, state economies and small business – and how the Obama administration is waging war on all three.

To begin with, despite President Obama’s rhetoric about an “all of the above” energy plan, his Environmental Protection Agency has been systematically trying to undercut the development of unconventional energy – notably natural gas from shale. In what critics have rightfully assailed as a “shoot first, get the facts later” approach, the agency has worked to appease its environmentalist allies (and would-be contributors to the Obama campaign) by plotting to derail hydraulic fracturing, the process by which gas is extracted from rock formations deep in the Earth.

For example, pushed by charges from national anti-drilling activists that fracturing was contaminating drinking water in Dimock, Pa., the EPA charged to the rescue – only to discover that no rescue was necessary. In July, the agency concluded the town’s drinking water was safe. In Parker County, Texas, EPA said that Range Resources’ natural gas operations – which included fracking – were responsible for contaminating local water supplies and ordered the company to fix its wells. In March, it was forced to withdraw the order after being unable to prove that Range was responsible for the presence of methane in water.

And now, after running roughshod over state regulators in both cases and losing, the agency is undertaking a national study on fracking. Given EPA’s attitude toward drillers – one former regional administrator said the agency’s general philosophy was to “crucify” oil and gas companies – it doesn’t take a soothsayer to see where this path is likely to lead.

To cripple fracturing is to kill jobs. Consider Ohio, for example, a vital swing state for Mr. Romney. A 2011 study concluded that activity in the Utica Shale could create 204,500 jobs by 2015, and increase annual salaries and income by $12 billion. Job growth in the Buckeye State is among the fastest in the country. The unemployment rate is below the national average.

It’s not just Ohio, either. In Pennsylvania, total employment related to drilling in the Marcellus Shale has soared by 238,000 jobs since 2008. And a just-released IHS Global Insight report says a surge in unconventional oil and gas extraction will support more than 3.5 million jobs nationally by 2035 – and fracking will support about 1.7 million of them.

In a slow economic recovery in which unemployment remains stubbornly high, it simply makes no sense to extinguish the country’s brightest job creation light. Yet with its assault on fracking, that’s exactly what the Obama EPA is attempting to do. Mr. Romney should be pushing that point, especially in swing states like Ohio, in the final days remaining to campaign.

Then there’s the matter of local economies. It’s no secret that the recession has left states and communities cash-strapped. It’s also no secret that shale gas is helping to ease the burden:

In mid-October, Pennsylvania announced that almost 1,500 towns and every county government would share $204 million in impact fees from the Marcellus Shale.

Texas Comptroller Susan Combs reported that total collections for the state’s 2012 budget year were $3.7 billion higher than expected, with production in the Eagle Ford Shale being a key driver behind the increased collections.

It is estimated that drilling in the Utica Shale will generate $433.5 million in state and local taxes by 2014.

The candidates can talk all they want about tax cuts. But derailing shale gas development is going to put a heavy burden on state governments and local municipalities, conceivably leading to higher taxes or reductions in vital services.

Finally, the president speaks glowingly of his record on small business. But when he says he wants to end $4 billion in “corporate welfare” for oil and gas companies, he’s really arguing against his own point.

Sure, it’s good politics and better rhetoric to go after Big Oil. However, Mr. Obama does not mention that the companies benefiting most from industry-specific tax breaks aren’t the majors – they’re small, independent producers. The president is advocating a policy that would effectively shut them down.

There are a lot of other benefits to shale gas development: It burns more cleanly than coal; it helps generate low-cost power that saves families money and keeps manufacturing costs down; and it reduces the so-called “petro-power” of Russia, Iran and Venezuela. But at the end of the day, its most important immediate benefits are jobs, taxes and small business growth. As the campaign races to a close, the Romney campaign would be well served to remember that, when it comes to energy policy, it’s “still the economy, stupid.”